(Updates with offering size in first paragraph.)
Jan. 3 (Bloomberg) -- Citigroup Inc., the third-largest U.S. bank, plans to sell $2.5 billion of five-year notes in its biggest bond offering since 2009 as relative yields on its debt expand.
Citigroup may sell the senior fixed-rate securities as soon as today, according to a person with knowledge of the transaction. They may yield 360 basis points, or 3.6 percentage points, more than similar-maturity Treasuries, said the person, who declined to be identified because terms aren’t set. Citigroup plans to issue $15 billion to $20 billion of long-term debt this year, according to an Oct. 20 presentation on its website.
Average spreads on New York-based Citigroup’s debt widened 208 basis points last year to 402 basis points as concern mounted that Europe’s debt crisis would hinder banks’ profitability worldwide. The extra yield investors demand to own U.S. bank bonds instead of Treasuries grew 174 basis points to 384 in 2011, according to Bank of America Merrill Lynch index data.
Citigroup’s $1.875 billion of 3.953 percent notes due in June 2016 traded at 98.5 cents on the dollar to pay a 345 basis- point spread at 11:38 a.m. in New York, according to Trace, the bond price reporting system of the Financial Industry Regulatory Authority. The debt was issued on June 8 at a 200 basis-point spread, according to data compiled by Bloomberg.
Citigroup sold $5 billion of notes backed by the Federal Deposit Insurance Corp. on Oct. 20, 2009, Bloomberg data show.
Spreads on bonds from JPMorgan Chase & Co., the biggest U.S. bank by assets, widened 122 basis points to 266 on average in 2011, while No. 2 Bank of America Corp.’s bond spreads expanded 310 basis points to 565, Bank of America Merrill Lynch index data show.
--Editors: Mitchell Martin, John Parry
To contact the reporter on this story: Tim Catts in New York at email@example.com
To contact the editor responsible for this story: Alan Goldstein at firstname.lastname@example.org